President Trump Hints at His Next Trade War Target: French Wine

(Bloomberg) — President Donald Trump promised to do “something” about French wine that he said is allowed into the U.S. virtually tariff-free while France imposes duties on U.S. wine, calling the arrangement unfair.

“France charges us a lot for the wine. And yet we charge them very little for French wine,” Trump complained in an interview with CNBC anchors on Monday after visiting Normandy last week.

“So the wineries come to me and say, ’Sir’ — the California guys, they come, ’Sir, we’re paying a lot of money to put our product into France, and you’re letting’ — meaning, this country is allowing — ‘these French wines, which are great wines, but we have great wines too — allowing it to come in for nothing. It’s not fair.”’

“And you know what?” Trump added. “It’s not fair. We’ll do something about it.”

Trump has complained about France charging tariffs on U.S. wine in the past — without taking action. The president tweeted in November that it’s too hard for American wine producers to sell in France but that the U.S. makes it “easy” to import French wines, which he said “must change.”

Trump met with French President Emmanuel Macron last week in Normandy during a commemoration of the 75th anniversary of the D-Day invasion. It’s unknown whether the two leaders discussed wine tariffs; neither of them mentioned the issue to reporters at their meeting. Trump praised relations between the countries, telling Macron: “The relationship between you and I, and also France and the United States, has been outstanding.”

The U.S. charges a tariff of 5 cents per 750 milliliter bottle of imported still wine and 14 cents for sparkling wine, according to the Wine Institute, an advocacy group for California winemakers. European Union tariffs for imported wine range from 11 cents to 29 cents per bottle, according to the group.

“High tariff rates constitute the single most restrictive barrier to U.S. wine exports,” the group says on its website.

The U.S. is the biggest client for EU wine producers, absorbing almost a third of the bloc’s exports in 2017, the most recent year for which data is available, according to the EU’s statistical office. By contrast, the U.S. accounts for only 16 percent of the EU’s wine imports, well behind Chile and also trailing Australia, Eurostat said.

Any potential U.S. measures against French wine would have to target the entire EU, as the bloc is a common trade area. The EU exported 11.3 billion euros of wine in 2017 to third countries, 32 percent of which was to the U.S.

On the other hand, EU member states imported a total of 12.9 billion euros of wine in 2017, but only 20 percent of these imports came from outside the EU. And out of this small share, only 16 percent was American wine.

Trump, who says he doesn’t drink alcohol, has a history with wine. He purchased a winery near Charlottesville, Virginia, in 2011 in a foreclosure auction. The operation is now run by Trump’s son, Eric Trump, who serves as president.